Initial Coin Offerings and Token Sales face regulation in the United States

17 August 2017

Bitcoin and other cryptocurrencies using distributed ledger and blockchain technologies are facing scrutiny and regulation in the United States on the part of the Securities and Exchange Commission, as the regulator moves to get the digital asset industry under its control. Reports in the media sources note that SEC believes the cryptocurrencies should be subject to federal securities legislation.

Jay Clayton, SEC Chairman, said that offering and selling digital currencies are regulated by the rules of the federal securities laws. Such regulations are applicable to fintech companies that widely use distributed ledger and blockchain systems to practice such things as initial coin offering or sales of tokens. Startups failing to register their ICO could face liability for breaching the laws governing securities markets.

SEC explains the reason for the regulation of blockchain industry as it wants to ensure for investors proper terms of their money allocation that should include all required disclosures and investors protection requirements.

The regulatory reports comes on the heels of the last weekend surge in bitcoin prices from $3,000 recorded a week ago to $4,135. Experts explain the rise by efforts made by bitcoin to strengthen user confidence in the digital asset by boosting its security through a code modification called SegWit which also allows more transactions to be stored in every chain of blocks.